CIMB Group, Malaysia's 2nd largest financial institution formalised a strategic joint venture with Aviva Plc, the world's 5th largest insurance group. The CIMB Aviva Life insurance and Takaful joint venture will look to offer differentiated and innovative retirement savings, protection and investment products to retail and corporate clients in Malaysia.
The strategic partnership, which was initially announced in January this year, sees Aviva taking a 49% stake in CIMB Group's insurance subsidiaries, Commerce Life Assurance Berhad and Commerce Takaful Berhad, for a consideration of RM500 million. CIMB Group will own the remaining 51%. All regulatory and shareholder approvals for this transaction have been obtained and the transaction is expected to be completed by early July.
The share sale agreement was executed today by Chief Executive of CIMB Group, Dato' Nazir Razak, and Aviva Asia Pte Ltd Managing Director, Charles Anderson.
CIMB Group's collaboration with Aviva will enable the Group to deliver best-of-breed life insurance and takaful products to its customers. In welcoming Aviva as a partner of the Group, Nazir said the collaboration provides huge opportunity, benefiting both parties. "This joint venture is one of immense potential. CIMB Group's distribution reach, treasury capabilities and customer base, combined with Aviva's expertise in designing industry-leading insurance products and processes is a natural fit. We expect the CIMB Aviva joint venture to be a leading Malaysian insurer within a very short time frame," he said. Nazir also remarked that the joint venture is consistent with Malaysia's Financial Sector Master Plan that encourages domestic financial institutions to enhance their competitiveness through smart partnerships in the light of market liberalisation.
The joint venture also involves an exclusive bancassurance partnership with CIMB Bank to distribute life insurance, accident and health insurance products including associated investment linked and retirement offerings.
Nazir added that the Malaysian population was still under-insured compared to other more developed nations. For example, according to SwissRe, the life insurance penetration rate among Malaysian households is only 50%, compared to 123% for Taiwan and 600% for Japan. "The opportunity that exists is huge. Aviva's product expertise and CIMB Group's reach will ensure that this joint venture brings with it a compelling proposition to address this market opportunity," Nazir elaborated.
Nazir also added that the CIMB Aviva joint venture entity will be launching a new logo and will be going through a re-branding exercise. "It is crucial for us to solidify our presence in the market and as such will be going through a full scale brand positioning exercise. In fact, as this is being done, the joint venture will already be launching a new investment linked insurance product next week in the form of Takaful Global Giants."
Meanwhile, Anderson in his speech said, "Aviva has many joint ventures around the world and their successes have been defined by the values and vision we share with our partners. We have big ambitions for our strategic partnership with CIMB, one of which would be to take a top five position in Malaysia's life insurance and Takaful sector. Led by a strong management team, I am confident the JV will deliver against this."
Anderson announced the new management team for the joint venture during the event. The life insurance business will be headed by Ho Ming Heng as Chief Executive Officer. Most recently, Ming Heng served at Aviva Asia's Regional Office as Deputy Managing Director & Operations Director, Asia. The Takaful business will continue to be led by Zainudin Ishak as Chief Executive Officer. "The team is based in Kuala Lumpur, comprising senior management members from Aviva and CIMB Group who bring with them vast experience and in-depth knowledge of the industry," said Anderson.